The Object Economy: “Alternative” Banking in Chicago

In 2017, more than 22 percent of all U.S. households used an alternative financial service at least once. While fringe-banking enterprises mainly serve people with low or moderate incomes who lack access to more conventional banking services, pawnshops in particular also provide an important and distinct last resort for many customers.

Asset Poverty and the High Cost of Fringe Banking

The seventh chapter looks more closely at the challenges and costs of the lack of financial institutions within an inner city, and what the implications are for asset accumulation and economic stability. Despite a plethora of large banking establishments in the downtown area and a good concentration of retail banks, poorer adjacent neighborhoods in central San Diego have a dearth of retail banking. Financial services are available, but they are what are sometimes called “fringe banking.” These businesses typically have higher costs than conventional retail banks, but are often the only means that the urban and working poor can access financial services. Since obtaining critically important assets are critical for the urban poor, having a well-functioning financial services system to aid in this is crucial. Unfortunately, this is not the case.